EM and FIRE

[Torsion]

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And though I don’t want “soft” kids I will absolutely do everything I can to position them for success: the world sucks too much not to. Sometimes that means paying for things, sometimes that means purposely not paying, or at least not telling them you will.

I think the first 18 years of a child's life is the time to instill values of diligence, resiliency, and self sufficiency. There is value in having "skin in the game" so to speak, but letting your kid get saddled with debt for an undergraduate degree (a requirement for any white collar career) is not how to teach this imo.

 

[Dred Pirate]

I graduated college relatively recently (about 8 years ago) and went to a relatively inexpensive state university. One of my roomates came from a more modest background and did not have any significant financial support from mom and dad. He worked multiple on campus jobs - often nights and weekends - all while completing an engineering degree. He missed out on a lot of what makes college a memorable and transformative experience because of his workload. He probably didn't get the grades he wanted because he had to work to pay for school and that took away from study time. Despite all of that, he still needed to take out loans to pay for school.

Putting a few thousand dollars every year into a 529 is about the least a high earner can do for their kids. I wouldn't wish what I saw him go through on anyone.

exactly - My wife and I come from very different backgrounds.
I grew up poor as poop during the farm crisis. Luckily I was smart and poor - so got great financial aid (it cost me $3k a year for tuition, room and board at a pricey private school in late 90's. I paid my own way (using loans) I did a fun work study job in the atheltic department for 10 hours a week for beer money (and ironically it also got me a NCAA post grad scholly for $5k). pharm school was a whole different story - I graduated with 6 figure loans, and worked almost full time during school. In undergrad I never missed out on an of the college stuff, in pharm school I was a little older, but still don't feel I missed out on much.

Wife grew up in an upper middle class family - undergrad and masters at expensive private schools- dad paid for it all.

We have debated what we should do for our child. We should have a pretty healthy 529 plan to cover most of the cost. I think it is good for them to have a little skin in the game, but I think we can figure out a way without straddling them in debt.

 

[Brigade4Radiant]

I graduated college relatively recently (about 8 years ago) and went to a relatively inexpensive state university. One of my roomates came from a more modest background and did not have any significant financial support from mom and dad. He worked multiple on campus jobs - often nights and weekends - all while completing an engineering degree. He missed out on a lot of what makes college a memorable and transformative experience because of his workload. He probably didn't get the grades he wanted because he had to work to pay for school and that took away from study time. Despite all of that, he still needed to take out loans to pay for school.

Putting a few thousand dollars every year into a 529 is about the least a high earner can do for their kids. I wouldn't wish what I saw him go through on anyone.

Yeah did he do two years of community college? If you have to work in college at the exchange of studying just take on the debt or delay college by a couple of years. But he had drive normally only 66% of students graduate in a normal state school. For the expensive ones like vanderbilt it is 90%

 

[Birdstrike]

I think the first 18 years of a child's life is the time to instill values of diligence, resiliency, and self sufficiency. There is value in having "skin in the game" so to speak, but letting your kid get saddled with debt for an undergraduate degree (a requirement for any white collar career) is not how to teach this imo.

Yeah did he do two years of community college? If you have to work in college at the exchange of studying just take on the debt or delay college by a couple of years. But he had drive normally only 66% of students graduate in a normal state school. For the expensive ones like vanderbilt it is 90%

Good points, both of you.

529s are big (make sure it's a good plan, in a good state). We started them for both of my kids at birth. EVERY. ----ING. MONTH, since birth. They've grown, big time, and now we've got enough to cover 4 years and some graduate school if needed. What also helps immensely, is taking advantage of whatever resources are available. For example, my oldest tested into a public ($0 tuition) magnet high school that allows her to amass two years of college credit by the end of high school. It's not even AP. It's straight-up transferrable college transcript credits. The high school is literally on a nearby college campus and they take some of their classes there; easy classes like general education credits. She says her hardest classes are the ones at her high school, the easiest at the college. Also, they get a 6.0 for any college A, so their GPA ends up outrageously high (well above 4.0, if all A's; can still be a 4.0 even if not all A's).

The end result: If she goes to a public in state school, her undergrad will be 100% covered (1/2 by her public school choice) and 1/2 by me. Plus, there will still be 529 money leftover if she goes to some form of graduate school. She's got a legit shot to graduate debt free, or at a minimum, way below average debt. On the other hand, if she chooses an out of state, or private undergrad, loses her credits, pays huge tuition and goes beyond 4 years, she may saddle herself with insane levels of debt. But it'll be her debt. And her choice.

My youngest daughter is also on a very similar track.

F.I.R.E. may be possible for my kids, even if it's not looking likely for her old man.


P.S. Watch Yellowstone. It's a good show. Cowboy mafia. 100% legit.

 

[dadaddadaBATMAN]

I think the first 18 years of a child's life is the time to instill values of diligence, resiliency, and self sufficiency. There is value in having "skin in the game" so to speak, but letting your kid get saddled with debt for an undergraduate degree (a requirement for any white collar career) is not how to teach this imo.

I agree. I think there are advantages to the power of the purse, if you only use it as a last resort.

I also think it’s difficult to overstate the value of 4 years of easy living and fun while you’re young.

However, I recognize not everyone agrees with me, and there isn’t really a wrong or right here. That’s how I deal with most parenting discussions, it prevents the “mommy wars” mentality.

 

[Birdstrike]

And though I don’t want “soft” kids I will absolutely do everything I can to position them for success: the world sucks too much not to. Sometimes that means paying for things, sometimes that means purposely not paying, or at least not telling them you will.

I agree with this, to a large extent. That's how my dad raised me. So far, my kids have made it easy for me by working summers in high school by choice (including during peak pandemic surges in a busy waterpark, Lol) and by earning huge amounts of college credits in high school. They're largely "paying their own way" in a different form than I did, back in the day. But it's equally as valid, as done by today's means and standards.

For example, it makes it a heck of a lot easier to justify buying your 15-year-old a car when they're using it to drive to a school where they earn 2 years of college credit, while playing two sports, getting excellent grades, and working a full time summer job.

 

[Birdstrike]

I think the first 18 years of a child's life is the time to instill values of diligence, resiliency, and self sufficiency...but letting your kid get saddled with debt for an undergraduate degree (a requirement for any white collar career) is not how to teach this imo.

You want to help your kids out, for sure. But you don't want to guarantee such an easy path that they don't value it. I know people that had it made so easy for them, they were conditioned to view their upbringing as a welfare program of sorts, and life as a series of trying to mooch off the next available sucker who'd give them a free ride. These people place higher value in being a trust-fund baby, than in achievement, innovation and hard work.

At the same time, a lot of it depends on the kid. Different kids respond differently. Parenting isn't one-size-fits all.

 

[thegenius]

Keep in mind inflation which the 4% rule takes into account.
the 2 big factors are simple how big is the nest egg and how much do you spend.
also net worth means little as money in a tax deferred account isn’t equal to money in a regular brokerage (post tax account) of my liquid NW it’s about 50/50 but as my spending on my kids rises the tax deferred amount won’t keep pace.
i am a fan of coast FI and fatFI. The reality is for most of us we worked so hard to get here that even if some retires early it will be to do something else like teach in Hs or so real estate. That’s not retiring early. That’s switching careers. There is no issue with that.
i think the goal of FI is control.
for those who don’t think it’s doable in your mid 40s on em pay you have a spending problem And lifestyle bloat. I’m not even saying thats bad. But you should be able to imagine how your personal spending would be at 100k per year. People do it all the time and get by. It might not be your dream but it is doable. As I tell my residents 3x your residency budget and save the rest. You will thank me in 5 years.
avh em pay is about 350-380k a year. For the sake of this exercise we will say 30k a month assuming you are single or a sole earner.
pre tax health insurance for a family $1500
25% to taxes.
That would leave you around 21k a month. You cant live on 10k spend a month? Save $10-11k. Even with student loans save half spend half til you are out of debt. All extra money goes there too.
pill confess I spend way more than that. However I have a working spouse who makes 6 figures, multiple income streams both medicine and non medicine related And my em pay is above avg.
its doable To live on way less than we think but most of us don’t want to. Whether it is a nice ski resort or beach resort vacation. A family trip to Disney or a fancy tesla. We worked hard and want nice things and that’s nothing to be ashamed of.

You're right inflation is high enough that you'll need your retirement savings to probably give you a 6-7%/year return. That isn't easy....YOY for decades. it's easy now you can put that into SPY or dividend aristocrats and probably be OK. Remember for purposes of this exercise you want an annuity to pay you XX dollars a year. For the rest of your life. That's true retirement.

So you make 30K / month
- 10K to pre-living expenses (taxes, insurance, disability, etc)
- 10K to living expenses
- 10K to savings.

If we assume 8-10% YOY return over the next several decades (and it might be more like 10% given all the money supply we have introduced post-covid). Investing 10K/month, you need to invest for 15 years to make 3.5M at 9%. If you invest for 20 years you'll have 6.5M at same percentage. Note that if you make just 2% less/year, that is 7%/year...these numbers are now 3M and 4.9M.

assuming you become an attending at age 30, and you retire at age 50, would you want to live the rest of your life off of dividends produced by 4.9M? standard dividend funds pay about 3%/year. 3% of 4.9M is only 12.5K/month. So now you are going from 30K/month down to 12.5K/month.

These numbers are not reasonable. Yes I agree if one lives frugally and lives like a resident they can be happy. But that is against the human condition. As you allude to people work very hard to be a doctor. all fellow doctors have nice lifestyles whether they can afford it or not. Are you going to be the 1/100 doctor that doesn't live a nice lifestyle? There is nothing wrong with working hard to spend more and to gather some enjoyment from some aspects of life.

I don't know if this calculus includes having and raising a family. Those are huge expenses too. Kids cost a lot. And there are just so many variables to cost and living. I still think that if one wants to truly retire...they are not going to work 20 years at 30K/year and then all of a sudden stop working and expect to live on less than 1/2 of that. You will want a similar income over the next several years until you figure out what you are going to do with your life. These people will eventually spend less but it will happen well after 65. My dad is a retired doctor and he's 77 and parents expenses are low, but it didn't get like that overnight. Took a decade or two.

The two big things in this equation is whether you have a family and how big it is...and where you live. I live in the Bay Area and I'm basically a single parent income (me) and it's hard to live off of 10K/month with a few teenage kids. My mortgage + prop taxes is 6K/month as is. I could choose to live in suburban Iowa, St. Louis, or 1 hr from Chicago and my expenses would probably be cut by 30-40%.

 

[dadaddadaBATMAN]

You're right inflation is high enough that you'll need your retirement savings to probably give you a 6-7%/year return. That isn't easy....YOY for decades. it's easy now you can put that into SPY or dividend aristocrats and probably be OK. Remember for purposes of this exercise you want an annuity to pay you XX dollars a year. For the rest of your life. That's true retirement.

So you make 30K / month
- 10K to pre-living expenses (taxes, insurance, disability, etc)
- 10K to living expenses
- 10K to savings.

If we assume 8-10% YOY return over the next several decades (and it might be more like 10% given all the money supply we have introduced post-covid). Investing 10K/month, you need to invest for 15 years to make 3.5M at 9%. If you invest for 20 years you'll have 6.5M at same percentage. Note that if you make just 2% less/year, that is 7%/year...these numbers are now 3M and 4.9M.

assuming you become an attending at age 30, and you retire at age 50, would you want to live the rest of your life off of dividends produced by 4.9M? standard dividend funds pay about 3%/year. 3% of 4.9M is only 12.5K/month. So now you are going from 30K/month down to 12.5K/month.

These numbers are not reasonable. Yes I agree if one lives frugally and lives like a resident they can be happy. But that is against the human condition. As you allude to people work very hard to be a doctor. all fellow doctors have nice lifestyles whether they can afford it or not. Are you going to be the 1/100 doctor that doesn't live a nice lifestyle? There is nothing wrong with working hard to spend more and to gather some enjoyment from some aspects of life.

I don't know if this calculus includes having and raising a family. Those are huge expenses too. Kids cost a lot. And there are just so many variables to cost and living. I still think that if one wants to truly retire...they are not going to work 20 years at 30K/year and then all of a sudden stop working and expect to live on less than 1/2 of that. You will want a similar income over the next several years until you figure out what you are going to do with your life. These people will eventually spend less but it will happen well after 65. My dad is a retired doctor and he's 77 and parents expenses are low, but it didn't get like that overnight. Took a decade or two.

The two big things in this equation is whether you have a family and how big it is...and where you live. I live in the Bay Area and I'm basically a single parent income (me) and it's hard to live off of 10K/month with a few teenage kids. My mortgage + prop taxes is 6K/month as is. I could choose to live in suburban Iowa, St. Louis, or 1 hr from Chicago and my expenses would probably be cut by 30-40%.

Yeah, Bay Area is one of those places with Monopoly money. Where I’m at You could live in a big house on a bunch of land and go on 3-4 nice vacations a year here for less than it’s costing you to live relatively lean.

But then you would live where I live, which is apparently worse than death for some people

 

[Mount Asclepius]

You're right inflation is high enough that you'll need your retirement savings to probably give you a 6-7%/year return. That isn't easy....YOY for decades. it's easy now you can put that into SPY or dividend aristocrats and probably be OK. Remember for purposes of this exercise you want an annuity to pay you XX dollars a year. For the rest of your life. That's true retirement.

So you make 30K / month
- 10K to pre-living expenses (taxes, insurance, disability, etc)
- 10K to living expenses
- 10K to savings.

If we assume 8-10% YOY return over the next several decades (and it might be more like 10% given all the money supply we have introduced post-covid). Investing 10K/month, you need to invest for 15 years to make 3.5M at 9%. If you invest for 20 years you'll have 6.5M at same percentage. Note that if you make just 2% less/year, that is 7%/year...these numbers are now 3M and 4.9M.

assuming you become an attending at age 30, and you retire at age 50, would you want to live the rest of your life off of dividends produced by 4.9M? standard dividend funds pay about 3%/year. 3% of 4.9M is only 12.5K/month. So now you are going from 30K/month down to 12.5K/month.

These numbers are not reasonable. Yes I agree if one lives frugally and lives like a resident they can be happy. But that is against the human condition. As you allude to people work very hard to be a doctor. all fellow doctors have nice lifestyles whether they can afford it or not. Are you going to be the 1/100 doctor that doesn't live a nice lifestyle? There is nothing wrong with working hard to spend more and to gather some enjoyment from some aspects of life.

I don't know if this calculus includes having and raising a family. Those are huge expenses too. Kids cost a lot. And there are just so many variables to cost and living. I still think that if one wants to truly retire...they are not going to work 20 years at 30K/year and then all of a sudden stop working and expect to live on less than 1/2 of that. You will want a similar income over the next several years until you figure out what you are going to do with your life. These people will eventually spend less but it will happen well after 65. My dad is a retired doctor and he's 77 and parents expenses are low, but it didn't get like that overnight. Took a decade or two.

The two big things in this equation is whether you have a family and how big it is...and where you live. I live in the Bay Area and I'm basically a single parent income (me) and it's hard to live off of 10K/month with a few teenage kids. My mortgage + prop taxes is 6K/month as is. I could choose to live in suburban Iowa, St. Louis, or 1 hr from Chicago and my expenses would probably be cut by 30-40%.

You're more likely changing from $10K/month (instead of $30K/month) to $12.5K/month in your scenario. Increasing amount going toward living expenses instead of decreasing. You don't tangibly feel the loss of income as you don't really receive the first $10K/month that goes toward pre-living expenses and transition from saving $10K/month to spending your savings. Taxes go way down, you stop paying for disability insurance and you should have all debt including mortgage paid off in retirement (unless wanting to leverage debt not out of necessity).

You can live a very nice lifestyle with $12.5K/month and everything else paid off. It all boils down to how much you want to be able to spend when you retire. That largely guides your retirement date. Your fixed expenses go down the older you get (primarily with mortgage payment gone). Usually your discretionary expenditures do as well as people do/spend less and less as they progress from age 50 to 90. I could very comfortably live on $50K/year and somewhat 'extravagantly' on $100K/year in retirement. I also enjoy the simple things. Others couldn't find that same level of contentment. I'd rather live on a lesser amount than still be grinding it out post age 50 in the pit on nights, weekends and holidays just so that I can live a more luxurious lifestyle. Time is short and money can't usually buy you more of it.

"Live in each season as it passes; breathe the air, drink the drink, taste the fruit, and resign yourself to the influence of each." - Henry David Thoreau

 

[Mount Asclepius]

"You give your children enough money to do something, but not enough to do nothing." - George Clooney (The Descendants)

I err towards the former. Shirtsleeves to shirtsleeves in three generations. I also agree though that there isn't a one size fits all approach as @Birdstrike stated. We all spend some amount on children. There is a lot of in-between from paying for everything and paying for nothing. I largely paid my own way through undergrad and medical school with some assistance. I don't think my experience was compromised, don't hold any ill will towards my parents who could have assisted me financially more, am incredibly grateful for both the amount they gave me and the amount they didn't, and appreciate the skin I had in the game.

 

[Birdstrike]

Your fixed expenses go down the older you get

This is something I have to keep reminding myself, that there are some expenses I have now, that are pretty massive, that I should be able to make go away in the last quarter to third, of my life. The first and most obvious being, no more having to save more retirement! Hopefully, I'll hopefully have no mortgage payment. I won't have to buy life insurance anymore (the retirement fund becomes that). No more money put into 529s, disability insurance, student loans, children's expenses (which are massive! car payments/insurance, camp, clothes, food, braces, health insurance, bigger house/yard) and so on. I'm sure my wife and I will want to travel once retired, if able. But there's a lot of other fat that I'll be able to cut out.

It's hard to see retirement as even possible, when in the beginning of your career. But if you start investing early and wisely (10-20% of your income, every month) it starts to seem possible, with enough passage of time. Thank God, for the miracle of compounding interest.

 

[EctopicFetus]

They can study hard and land scholarships. They can get jobs in between school years. They can enroll in co-op aka work study programs that cover tuition. Plus I live in TX where in state tuition is cheap. Nobody needs to go to private school. Lots of things you can do to finance your education without drowning in student loan debt, or mommy and daddy paying for everything

Nobody paid for my undergrad when I was in college. I earned and saved up money and paid for it myself without borrowing a dime from anybody.

Your kids can find money to pay for college. What are you going to do when you’re old ans can’t work and don’t have retirement money to survive on? Expect your kids to pay you? That should be a bigger financial priority.

I’m gonna have both. I know It’s stupid lucky. I came from jack ****. Borrowed for undergrad and med school. Everyone is different. I’m fairly set. My kids have 529s. My retirement comes first. It’s done. I’ll keep loading up at this point why not. I’m totally in your court with regards to retirement first.

 

[EctopicFetus]

You're right inflation is high enough that you'll need your retirement savings to probably give you a 6-7%/year return. That isn't easy....YOY for decades. it's easy now you can put that into SPY or dividend aristocrats and probably be OK. Remember for purposes of this exercise you want an annuity to pay you XX dollars a year. For the rest of your life. That's true retirement.

So you make 30K / month
- 10K to pre-living expenses (taxes, insurance, disability, etc)
- 10K to living expenses
- 10K to savings.

If we assume 8-10% YOY return over the next several decades (and it might be more like 10% given all the money supply we have introduced post-covid). Investing 10K/month, you need to invest for 15 years to make 3.5M at 9%. If you invest for 20 years you'll have 6.5M at same percentage. Note that if you make just 2% less/year, that is 7%/year...these numbers are now 3M and 4.9M.

assuming you become an attending at age 30, and you retire at age 50, would you want to live the rest of your life off of dividends produced by 4.9M? standard dividend funds pay about 3%/year. 3% of 4.9M is only 12.5K/month. So now you are going from 30K/month down to 12.5K/month.

These numbers are not reasonable. Yes I agree if one lives frugally and lives like a resident they can be happy. But that is against the human condition. As you allude to people work very hard to be a doctor. all fellow doctors have nice lifestyles whether they can afford it or not. Are you going to be the 1/100 doctor that doesn't live a nice lifestyle? There is nothing wrong with working hard to spend more and to gather some enjoyment from some aspects of life.

I don't know if this calculus includes having and raising a family. Those are huge expenses too. Kids cost a lot. And there are just so many variables to cost and living. I still think that if one wants to truly retire...they are not going to work 20 years at 30K/year and then all of a sudden stop working and expect to live on less than 1/2 of that. You will want a similar income over the next several years until you figure out what you are going to do with your life. These people will eventually spend less but it will happen well after 65. My dad is a retired doctor and he's 77 and parents expenses are low, but it didn't get like that overnight. Took a decade or two.

The two big things in this equation is whether you have a family and how big it is...and where you live. I live in the Bay Area and I'm basically a single parent income (me) and it's hard to live off of 10K/month with a few teenage kids. My mortgage + prop taxes is 6K/month as is. I could choose to live in suburban Iowa, St. Louis, or 1 hr from Chicago and my expenses would probably be cut by 30-40%.

Not here for an FI discussion but you are looking at an annuity. That’s not what retirement means. You can draw down your money as well. In the example of earning 30k and spending 10 and saving 10 but in retirement you have 12.5 without drawing the principal. My retirement spend is 15-18k a month in todays dollars. Kids will be off payroll, I don’t even include money from rental properties. I may sell them before the time is right. If you legit want 12k a month in income you don’t need $4m. I own maybe 650k in investment real estate and my rents approach 6k a month. Just options.

 

[thegenius]

You're more likely changing from $10K/month (instead of $30K/month) to $12.5K/month in your scenario. Increasing amount going toward living expenses instead of decreasing. You don't tangibly feel the loss of income as you don't really receive the first $10K/month that goes toward pre-living expenses and transition from saving $10K/month to spending your savings. Taxes go way down, you stop paying for disability insurance and you should have all debt including mortgage paid off in retirement (unless wanting to leverage debt not out of necessity).

You can live a very nice lifestyle with $12.5K/month and everything else paid off. It all boils down to how much you want to be able to spend when you retire. That largely guides your retirement date. Your fixed expenses go down the older you get (primarily with mortgage payment gone). Usually your discretionary expenditures do as well as people do/spend less and less as they progress from age 50 to 90. I could very comfortably live on $50K/year and somewhat 'extravagantly' on $100K/year in retirement. I also enjoy the simple things. Others couldn't find that same level of contentment. I'd rather live on a lesser amount than still be grinding it out post age 50 in the pit on nights, weekends and holidays just so that I can live a more luxurious lifestyle. Time is short and money can't usually buy you more of it.

"Live in each season as it passes; breathe the air, drink the drink, taste the fruit, and resign yourself to the influence of each." - Henry David Thoreau

You have to pay taxes, insurance, etc every year. It’s just hard to go from 30K to 15K immediately, especially when young and still active

 

[namethatsmell]

If any med student/resident happens to read this: choose your spouse wisely. While it's hardly original advice, it's likely the biggest predictive factor for reaching FIRE.

What does that mean when it comes to finance? It means pick somebody who thinks it'd be a) cool to not have to work forever and can comprehend what's needed in terms of savings/investing to make that happen and b) isn't afraid to work as hard as you.

If you can find that in a mate, the money stuff will happen.

 

[emergentmd]

I am 48 and can FIRE tomorrow. I work 6 dys EM because what am I going to do with 3 kids still in middle school and younger?

If we sold our most valuable rental property, I could pay off my other 8 rental properties and my current homestead being debt free. Rental income would be about 15K/month after all taxes/carrying costs. Plus my Apt syndication about 2K/month. Plus my business equity that is bringing in close to 6 figures/month.

I essentially work to be productive but my business could collapse tomorrow bringing my income to about 17K/month. I can live on 17K/month but definitely would need to cut down on lifestyle.

 

[EctopicFetus]

I am 48 and can FIRE tomorrow. I work 6 dys EM because what am I going to do with 3 kids still in middle school and younger?

If we sold our most valuable rental property, I could pay off my other 8 rental properties and my current homestead being debt free. Rental income would be about 15K/month after all taxes/carrying costs. Plus my Apt syndication about 2K/month. Plus my business equity that is bringing in close to 6 figures/month.

I essentially work to be productive but my business could collapse tomorrow bringing my income to about 17K/month. I can live on 17K/month but definitely would need to cut down on lifestyle.

I want to grow my real estate holdings. I generate post expense like 2500 from my real estate. Expenses like another 2500. If I paid it all off could get 5k or so in rent. Ideally want to get to 10k. You can live a good life on 10 k a month and it doesn’t even include other money. There are many ways to get passive income. None allow u the control or returns of owning real estate Directly. Lots of options out there but this should be the goal. My dream is 15 properties and refinance one a year as it is paid off and live off of that. I don’t think I’ll get there. Few good deals but something to aim for. I’ve been lucky $ wise though.

 

[namethatsmell]

@emergentmd @EctopicFetus How do you guys pick what deals you go after? Do you go after rental properties only near where you live? Or target markets anywhere with a good deal and manage them from afar?

 

[emergentmd]

@emergentmd @EctopicFetus How do you guys pick what deals you go after? Do you go after rental properties only near where you live? Or target markets anywhere with a good deal and manage them from afar?

Keys to being successful in real estate.

1. Be lucky. I bought all of my real estate starting in 2015 in Austin and the surrounding area. If you know the Austin market, after about 2010, you could not go wrong. Throw a dart anywhere in Austin and you will have 3x the value if you bought in 2015.

2. I only buy properties close to where I live. I know the area, I can check in when needed, and have a pulse on the rental market.

3. Buy now if you can. Don't wait. Avoid analysis by paralysis. So many people I know thought 2015 was too expensive. Then 2018 was too expensive. Now 2021 too expensive. They currently sit on zero properties wishing they bought 6 yrs ago. No one knows when it is too expensive so no reason not to buy now. Bought my first duplex in Austin in 2015 for 160K now worth about 450K.

4. Interest rate is low, money is cheap, leverage your money. Bought 2015 duplex, put down 50K. If I sold it tomorrow for 450K, that is close to 6x my money. Current rent is 30k/yr on 50K down is good cash flow.

5. Do not over leverage and as a doc, you should have plenty of income to support years with negative cash flow. Ride it out, prices and rental rates will go up.

6. I will reiterate, buy now. Leverage your money, buy into better properties via 1031. I bought a condo for 135K in 2014. Sold it in 2017 for 180K and a 55K profit. Took the 90K equity and put it into a 480K Lake LBJ lakehouse in 2017. Now this house which is a combo vacation home we use 10x/yr and 2021 grossed 150K in Vrbo rent. I am guessing this home is worth north of 2M right now.

As a doc, you have enough money to weather the downturn and unexpected expenses. Do it for 10 years and you will do well if you pick a growing city. Austin feels super expensive but will not be in 5 years.

Real estate is like a snowball. It feels really slow to begin with buy by year 5-10, will be rolling down that hill. Since buying the condo in 2014, I currently have 5 duplexes, 2 VRBO lake house, two SFHs. Gross rent for the 9 properties is 400K.

I am at the point now where I need to decide if I want to take out all downturn risks and be debt free or continue to leverage into more properties. If I continue to leverage, I could easily buy another property each year just off the current cash flow.

Buy now, don't forget to diversify and max out your retirement which I put 55K a yr in my SEP yearly. Look into apt syndication, mobile home parks, storage facilities, medical business. I currently have income from my ER gig, medical facility, Apt syndication, rental properties, medical billing review, and worker comp gig.

 

[GassYous]

Keys to being successful in real estate.

1. Be lucky. I bought all of my real estate starting in 2015 in Austin and the surrounding area. If you know the Austin market, after about 2010, you could not go wrong. Throw a dart anywhere in Austin and you will have 3x the value if you bought in 2015.

2. I only buy properties close to where I live. I know the area, I can check in when needed, and have a pulse on the rental market.

3. Buy now if you can. Don't wait. Avoid analysis by paralysis. So many people I know thought 2015 was too expensive. Then 2018 was too expensive. Now 2021 too expensive. They currently sit on zero properties wishing they bought 6 yrs ago. No one knows when it is too expensive so no reason not to buy now. Bought my first duplex in Austin in 2015 for 160K now worth about 450K.

4. Interest rate is low, money is cheap, leverage your money. Bought 2015 duplex, put down 50K. If I sold it tomorrow for 450K, that is close to 6x my money. Current rent is 30k/yr on 50K down is good cash flow.

5. Do not over leverage and as a doc, you should have plenty of income to support years with negative cash flow. Ride it out, prices and rental rates will go up.

6. I will reiterate, buy now. Leverage your money, buy into better properties via 1031. I bought a condo for 135K in 2014. Sold it in 2017 for 180K and a 55K profit. Took the 90K equity and put it into a 480K Lake LBJ lakehouse in 2017. Now this house which is a combo vacation home we use 10x/yr and 2021 grossed 150K in Vrbo rent. I am guessing this home is worth north of 2M right now.

As a doc, you have enough money to weather the downturn and unexpected expenses. Do it for 10 years and you will do well if you pick a growing city. Austin feels super expensive but will not be in 5 years.

Real estate is like a snowball. It feels really slow to begin with buy by year 5-10, will be rolling down that hill. Since buying the condo in 2014, I currently have 5 duplexes, 2 VRBO lake house, two SFHs. Gross rent for the 9 properties is 400K.

I am at the point now where I need to decide if I want to take out all downturn risks and be debt free or continue to leverage into more properties. If I continue to leverage, I could easily buy another property each year just off the current cash flow.

Buy now, don't forget to diversify and max out your retirement which I put 55K a yr in my SEP yearly. Look into apt syndication, mobile home parks, storage facilities, medical business. I currently have income from my ER gig, medical facility, Apt syndication, rental properties, medical billing review, and worker comp gig.

That's awesome, good for you. Pretty impressive how you've been able to do that. Great location too.

 

[EctopicFetus]

@emergentmd @EctopicFetus How do you guys pick what deals you go after? Do you go after rental properties only near where you live? Or target markets anywhere with a good deal and manage them from afar?

Im writing this before I read emergents response to give you an unfiltered response.

I only bought locally. All of my properties are within 30 mins of me. I know there are deals away from here but my strategy is to buy homes with upside but not to count that in my decision as far as if the numbers work. I found a real estate person who specializes in investment properties and let her look. Locally only my first deal hit the MLS, most are word of mouth, wholesalers etc. I don't have the time to scout the deals myself. I do think you have to be educated in real estate investing and then decide what matters to you (Cashflow is king for me). I do not consider appreciation in my investments. I expect it but the numbers don't factor. I have a buddy who does real estate and makes nutty assumptions on appreciation to make the deals fit his mold. Thats not for me.

I wanted multifamily where my cash on cash is at least 10% excluding capex, vacancy etc. This way paying down my mortgage and any appreciation is gravy. I do think I could own a long distance rental but the numbers would have to make sense and I would need a crazy return on a property in good shape.

To give you some details property 1 I paid 188k and put a new roof on it, its in a rapidly growing part of town. It is underrented for 1800/month. I get about 1k a month in cash flow from there. initial investment of around 50k and I am getting 12k a year. 24% cash on cash. It has recently been reappraised and is worth in the 250k range. New rent should be around 2200-2400/month. But I am slowly raising rents on my tenants. Been there for almost 3 years. never late with rent and don't complain. Im not gotta risk a vacancy for relatively small potatoes.

Property 2 is near the city a duplex, rents are 2300/month. I paid 288k now worth 350k. Cash flows 1k a month. 75K in and 12k a year in profit.

Property 3 I paid 123k rent is 1200/month. It is on 1.4 acres near the city. I paid all cash then did a cash out refi. I am in for 25k as it appreciated some and bank didn't mind. I could have legit waited another 6 months and been in for $0. Cash flows 600/month 7200/yr. It appraised for 150k as the land itself is worth 115k per acre. The home on it is nothing to brag about as you can imagine. The hard part in my opinion is the homes are dumpy. When my wife saw house 1 she was like NFW. My realtor talked her down and said you arent living here.

I think we want the nice shiny fancy properties but those usually are the ones being held for appreciation and cash flow sort of sucks. My hope is to get an 8 plex or a quad. I may build a quad on the land of property 3 in a decade if that area booms as expected. I think that might be my homerun buy. Land is beautiful great lot, private and big.

 

[EctopicFetus]

Keys to being successful in real estate.

1. Be lucky. I bought all of my real estate starting in 2015 in Austin and the surrounding area. If you know the Austin market, after about 2010, you could not go wrong. Throw a dart anywhere in Austin and you will have 3x the value if you bought in 2015.

2. I only buy properties close to where I live. I know the area, I can check in when needed, and have a pulse on the rental market.

3. Buy now if you can. Don't wait. Avoid analysis by paralysis. So many people I know thought 2015 was too expensive. Then 2018 was too expensive. Now 2021 too expensive. They currently sit on zero properties wishing they bought 6 yrs ago. No one knows when it is too expensive so no reason not to buy now. Bought my first duplex in Austin in 2015 for 160K now worth about 450K.

4. Interest rate is low, money is cheap, leverage your money. Bought 2015 duplex, put down 50K. If I sold it tomorrow for 450K, that is close to 6x my money. Current rent is 30k/yr on 50K down is good cash flow.

5. Do not over leverage and as a doc, you should have plenty of income to support years with negative cash flow. Ride it out, prices and rental rates will go up.

6. I will reiterate, buy now. Leverage your money, buy into better properties via 1031. I bought a condo for 135K in 2014. Sold it in 2017 for 180K and a 55K profit. Took the 90K equity and put it into a 480K Lake LBJ lakehouse in 2017. Now this house which is a combo vacation home we use 10x/yr and 2021 grossed 150K in Vrbo rent. I am guessing this home is worth north of 2M right now.

As a doc, you have enough money to weather the downturn and unexpected expenses. Do it for 10 years and you will do well if you pick a growing city. Austin feels super expensive but will not be in 5 years.

Real estate is like a snowball. It feels really slow to begin with buy by year 5-10, will be rolling down that hill. Since buying the condo in 2014, I currently have 5 duplexes, 2 VRBO lake house, two SFHs. Gross rent for the 9 properties is 400K.

I am at the point now where I need to decide if I want to take out all downturn risks and be debt free or continue to leverage into more properties. If I continue to leverage, I could easily buy another property each year just off the current cash flow.

Buy now, don't forget to diversify and max out your retirement which I put 55K a yr in my SEP yearly. Look into apt syndication, mobile home parks, storage facilities, medical business. I currently have income from my ER gig, medical facility, Apt syndication, rental properties, medical billing review, and worker comp gig.

I agree with all of this. MOney is cheap. All my mortgages are at under 4%. It will snowball. If you have a vacancy and lets say you only have 1 SFH you can ride it out. Use that major advantage. As mentioned too, diversify your income. Rela estate is one option and the easiest but I have a working spouse who makes 6 figures (non doc), I generate money from rentals, a side biz, and 3 different "jobs" I do related to my EM job. I also have some money in syndications but I view those as I would view my stock investments. I don't need cash right now so I just pump everything back into the market/investment. Will be doing a private equity fund this year as well.

Being a doc lets you leverage fairly stable high income. As emergent said max out your retirement accounts. My wife and I do this to the tune of over 6 figures in pre tax. We also do post tax and 529s. Lots of buckets to fill. If you have any hope of retiring early before 59.5 you need some money or cash flow from non retirement accounts due to penalties.

 

[Interpolfanclub]

I just finished a shift and would usually write more but I'm beat. Full time EM doc. I've wanted to invest in RE for years and didn't know how.

I joined a multifamily mentorship to accelerate my growth in RE and get off the bench. I put in the work, went to events, networked, and just closed on a +20 unit deal with partners that should really cash flow once we get it fully rented. About to close on another smaller deal this month.
We're pretty much a single income family so I can't really max out retirement and also have enough cash to put into real estate. But I've been maxing out retirement for years and have enough saved that I could stop now and retire at 55 if I wanted. So I'm saving cash to buy RE. I can't stand being at the mercy of admin, metrics etc and don't like the general direction of medicine these days. We have no investors in these deals so we only answer to ourselves, it's a pretty amazing feeling. I was finally uncomfortable enough with where I was that it just pushed me to take the leap and I'm glad I did.

ETA: I'm 41, would love to have the rental income emergent has when I'm 48.

 

[EctopicFetus]

I just finished a shift and would usually write more but I'm beat. Full time EM doc. I've wanted to invest in RE for years and didn't know how.

I joined a multifamily mentorship to accelerate my growth in RE and get off the bench. I put in the work, went to events, networked, and just closed on a +20 unit deal with partners that should really cash flow once we get it fully rented. About to close on another smaller deal this month.
We're pretty much a single income family so I can't really max out retirement and also have enough cash to put into real estate. But I've been maxing out retirement for years and have enough saved that I could stop now and retire at 55 if I wanted. So I'm saving cash to buy RE. I can't stand being at the mercy of admin, metrics etc and don't like the general direction of medicine these days. We have no investors in these deals so we only answer to ourselves, it's a pretty amazing feeling. I was finally uncomfortable enough with where I was that it just pushed me to take the leap and I'm glad I did.

ETA: I'm 41, would love to have the rental income emergent has when I'm 48.

I think this is a big part of it. For me it was a near suffocatin feeling of being forced to work. Needing to hit FI. If you dont have a degree of desperation it’s easy to make excuses. At some point you either will or you wont. I did. I aimed for FI before I finished residency. I realized em puts us in a position to be disposable like a babies dirty diaper. I value myself too much. Many of us are way too comfortable earning the 300k and being treated like crap and with that you never make hard moves.

 

[grt398]

Just dropping this here b/c it seems like another reason to get to FIRE, partial FIRE, or whatever suits you best ASAP. This is directly from CMS and has been addressed on the derm forum elsewhere but may get missed by many (as it was by me). It's addressing changes to billing scheduled to start in 2023:

"We do not believe MDM is necessarily the most critical or central component of E/M visits..."

https://www.federalregister.gov/documents/2021/11/19/2021-23972/medicare-program-cy-2022-payment-policies-under-the-physician-fee-schedule-and-other-changes-to-part#h-119

New Medicare Rules for Split / Shared Visits: What’s Changing and What To Do

In the 2022 Medicare Physician Fee Schedule Final Rule (Final Rule), the Centers for Medicare & Medicaid Services (CMS) announced new rules for split/shared visits in the facility setting. For 2022, such visits may be billed under the National Provider Identifier (NPI) of the physician or...

www.pyapc.com

It seems everything will be time based billing (aka whoever spends >50% of time with the patient will bill for it under their NPI). I'm curious how/if this will change some people's practices in the ED in terms of chart signing for NPP visits. And yes I know that there are definitely docs on the inpatient/outpatient side having their NPP's do all the work and just signing the chart (b/c it's insanely frustrating to call a consult and get a midlevel for me too), which is clearly a problem.

Also, it's kind of shocking that CMS is outright saying getting the diagnosis correct, aka the core part of providing medical care period, is not the most important part of a visit. They try to hedge later by saying "We do not believe this in any way devalues the unique education, training, experience, or expertise of physicians, but rather that both time and expertise are important.." If you don't get the diagnosis correct...regardless of time spent...what's the point. Why not just throw darts at a spinning wheel of diagnoses and chat about random life stuff with the patient for 20 minutes?

 

[Dr Mantis Toboggan]

Just dropping this here b/c it seems like another reason to get to FIRE, partial FIRE, or whatever suits you best ASAP. This is directly from CMS and has been addressed on the derm forum elsewhere but may get missed by many (as it was by me). It's addressing changes to billing scheduled to start in 2023:

"We do not believe MDM is necessarily the most critical or central component of E/M visits..."

https://www.federalregister.gov/documents/2021/11/19/2021-23972/medicare-program-cy-2022-payment-policies-under-the-physician-fee-schedule-and-other-changes-to-part#h-119

New Medicare Rules for Split / Shared Visits: What’s Changing and What To Do

In the 2022 Medicare Physician Fee Schedule Final Rule (Final Rule), the Centers for Medicare & Medicaid Services (CMS) announced new rules for split/shared visits in the facility setting. For 2022, such visits may be billed under the National Provider Identifier (NPI) of the physician or...

www.pyapc.com

It seems everything will be time based billing (aka whoever spends >50% of time with the patient will bill for it under their NPI). I'm curious how/if this will change some people's practices in the ED in terms of chart signing for NPP visits. And yes I know that there are definitely docs on the inpatient/outpatient side having their NPP's do all the work and just signing the chart (b/c it's insanely frustrating to call a consult and get a midlevel for me too), which is clearly a problem.

Also, it's kind of shocking that CMS is outright saying getting the diagnosis correct, aka the core part of providing medical care period, is not the most important part of a visit. They try to hedge later by saying "We do not believe this in any way devalues the unique education, training, experience, or expertise of physicians, but rather that both time and expertise are important.." If you don't get the diagnosis correct...regardless of time spent...what's the point. Why not just throw darts at a spinning wheel of diagnoses and chat about random life stuff with the patient for 20 minutes?

Ugh I’m the opposite of a hand holder. Rare for me to be in a room for more than 5 minutes.

 

[BoardingDoc]

Just dropping this here b/c it seems like another reason to get to FIRE, partial FIRE, or whatever suits you best ASAP. This is directly from CMS and has been addressed on the derm forum elsewhere but may get missed by many (as it was by me). It's addressing changes to billing scheduled to start in 2023:

"We do not believe MDM is necessarily the most critical or central component of E/M visits..."

https://www.federalregister.gov/documents/2021/11/19/2021-23972/medicare-program-cy-2022-payment-policies-under-the-physician-fee-schedule-and-other-changes-to-part#h-119

New Medicare Rules for Split / Shared Visits: What’s Changing and What To Do

In the 2022 Medicare Physician Fee Schedule Final Rule (Final Rule), the Centers for Medicare & Medicaid Services (CMS) announced new rules for split/shared visits in the facility setting. For 2022, such visits may be billed under the National Provider Identifier (NPI) of the physician or...

www.pyapc.com

It seems everything will be time based billing (aka whoever spends >50% of time with the patient will bill for it under their NPI). I'm curious how/if this will change some people's practices in the ED in terms of chart signing for NPP visits. And yes I know that there are definitely docs on the inpatient/outpatient side having their NPP's do all the work and just signing the chart (b/c it's insanely frustrating to call a consult and get a midlevel for me too), which is clearly a problem.

Also, it's kind of shocking that CMS is outright saying getting the diagnosis correct, aka the core part of providing medical care period, is not the most important part of a visit. They try to hedge later by saying "We do not believe this in any way devalues the unique education, training, experience, or expertise of physicians, but rather that both time and expertise are important.." If you don't get the diagnosis correct...regardless of time spent...what's the point. Why not just throw darts at a spinning wheel of diagnoses and chat about random life stuff with the patient for 20 minutes?

Quick and dirty math means if we can't game this somehow, my salary is going down by ~20k/yr.

 

[Interpolfanclub]

Ugh I’m the opposite of a hand holder. Rare for me to be in a room for more than 5 minutes.

Rare for all of us I think. Now as a pretty experienced MD I try and get out of the room as quickly as possible but make it seem like I was in there for a while.

Admin want the experience scores up which takes time at bedside but also want us to move the meat. Oh but also don't ever miss anything because you'll be second guessed by everyone. All of these things are usually in direct opposition to all of the other ones. I think it's one of the many causes of burnout in our profession.

There's a sentiment in real estate investing that many of us are driven by pain elsewhere to move towards RE. And that pain is what pushes you out of your comfort zone into something pretty daunting. I still get a lot of joy out of helping people who are actually sick but they are honestly few and far between. I just can't imagine myself in 10 years still being subject to the whims of hospital admin and people who don't have 1/10th the medical knowledge I have.

Just got off a meeting with my partners on our multifamily property and it feels great to be making steps to financial independence from medicine. I've really never done anything where I literally do not have a boss, it's fantastic.

Would counsel people beginning in medicine to beware the golden handcuffs. Keep your expenses within reason, focus on your marriage, and play well in the hospital sandbox with others. You are expendable to admin and the healthcare system in general.

 

[emergentmd]

Interpol,

Good for you. Glad you made the leap. It is very hard to get out of your comfort zone, some easier than others. The Comfort moat for physicians are much greater than most fields. An EM doc making 350K/yr has a huge moat and has little monetary reason to take risks. But you can never predict the future and the only way to control your destiny is being your own boss.

I live by that bold phrase. No one will help you improve you/your family life. Dems wont. Repubs wont. Gov wont. Your family wont. Your friends wont.

Healthcare costs is unsustainable. That is the bottom line and everyone will be cut until we get universal healthcare with lots of unknowns.

As a doc, you have $$$$ to do what most Americans can not. Use that $$$, take some risks or you will be faced with a smaller moat in the future.

I like RE so I gravitated to it. I like running my own business, so I gravitated to it. It could all have blown up and I could still be working for some CMG and from my old partners have become worse.

At worse, I get to make the final decision and have control of my destiny.

 

[ER BlueBlood]

Can I be this ER doc?

What is baby step 7? Lol

This doc sounds clueless haha hey guys I have almost no mortgage and 600k a year earnings should I pay off my mortgage?

 

[MechEDoc]

Interpol,

Good for you. Glad you made the leap. It is very hard to get out of your comfort zone, some easier than others. The Comfort moat for physicians are much greater than most fields. An EM doc making 350K/yr has a huge moat and has little monetary reason to take risks. But you can never predict the future and the only way to control your destiny is being your own boss.

I live by that bold phrase. No one will help you improve you/your family life. Dems wont. Repubs wont. Gov wont. Your family wont. Your friends wont.

Healthcare costs is unsustainable. That is the bottom line and everyone will be cut until we get universal healthcare with lots of unknowns.

As a doc, you have $$$$ to do what most Americans can not. Use that $$$, take some risks or you will be faced with a smaller moat in the future.

I like RE so I gravitated to it. I like running my own business, so I gravitated to it. It could all have blown up and I could still be working for some CMG and from my old partners have become worse.

At worse, I get to make the final decision and have control of my destiny.

What do you do for work where you can be your own boss?

 

[emergentmd]

What do you do for work where you can be your own boss?

Partner in FSER and my RE portfolio. I would still be able to pay the bills if either fails.